LONDON (Dow Jones)--The yen is rallying midday Wednesday despite the threat of another sovereign debt downgrade, with a broad range of market participants selling dollars and euros for the Japanese currency. A large U.S. investment house sold dollar/yen down toward Y132.50, where momentum and technical fund selling triggered more sell-stops, dealers said. Options and hedging-related plays are keeping the pair in a broad range of Y131.50-Y135.00, dealers said, although positioning suggests the immediate path is to the downside. "The market's still long of dollars, and nothing moves the market like positioning," said a Japanese bank dealer. Dollar/yen is expected to fall toward Y131.80, where Japanese names are expected to come in bidding strongly for dollars, said dealers. There has been little sign of repatriation flows Wednesday, dealers say, even though Japanese investors might have been spooked by the downgrade threat into sending cash back home. As reported, Moody's Investors Service Inc. threatened to downgrade the government's debt again, possibly by as much as two notches. At 1150 GMT Wednesday, the dollar was at Y132.20, a full yen weaker than Y133.20 seen at the London open Wednesday, and still down from the Y132.63 late Tuesday in New York. The euro was also sharply weaker against the yen, trading at Y115.70, down nearly a full yen from the intraday high, and down from late Tuesday's Y116.30. The single currency is relatively unchanged against the dollar, having broken out on the upside initially before retreating. Euro/dollar has been largely neutralized Wednesday by sterling's moves against both the dollar and euro, although U.S. retail sales figures for January at 1330 GMT could provide the single currency with direction. Encouraging U.K. jobless data at 0930 GMT pushed cable up through technical resistance at $1.4350, which triggered stop-loss buying up to $1.4365. As noted, U.K. unemployment posted a surprise fall in January, decreasing by 10,600 on the month. But a rather gloomy outlook for the U.K. economy in the Bank of England's Quarterly inflation report an hour later took the shine off sterling, and cable quickly fell to $1.4320. The BoE said growth risks remain to the downside, inflation risks to the upside, and that the ironing out of imbalances in the domestic economy is likely to see sterling depreciate. At 1150 GMT, sterling was at $1.4335, compared with $1.4326 at the London open and $1.4346 late Tuesday in New York. Euro/sterling was at GBP0.6106, down from GBP0.6120 late Tuesday. Indeed, the pair is sharply off from Tuesday's intraday high of GBP0.6171. The dollar was at CHF1.6885, down from CHF1.6930 earlier Wednesday, but up a little from CHF1.6872 late Tuesday in New York. Economists surveyed by Dow Jones Newswires expect headline U.S. retail sales to be 0.2% down on the previous month, with the core (excluding auto sales) up 0.4%.